textile industry report

The CIO Game

Document: Textile Industry Report.doc Date: 09-06-2014 Author: Frank Bergmann Page 1 of 18

Textile Industry in Europe - An Industry Study

Frank Bergmann, [email protected] 26.3.2003

1 Introduction ........................................................................................................................................... 3 2 The Confection Industry ....................................................................................................................... 4

2.1 Overview ..................................................................................................................................... 4 2.2 Market Segmentation and Purchase Criteria ............................................................................... 4 2.3 End-User Analysis Spanish Fashion Apparel .............................................................................. 4 2.4 The Value Chain .......................................................................................................................... 4 2.5 Distribution .................................................................................................................................. 7

3 Company Description ........................................................................................................................... 9 3.1 Corporate Configuration .............................................................................................................. 9 3.2 Competitive Environment ..........................................................................................................11

4 E-Business Strategy ..........................................................................................................................12 4.1 Verticalization of Multi-Brand Sales Outlets .............................................................................12 4.2 Service Improvement .................................................................................................................14 4.3 Difficulties with Internet Projects...............................................................................................14

5 Project Proposals ..................................................................................................................................15 5.1 Intranet & Knowledge Management Mini-Project .....................................................................15 5.2 Data Warehouse .........................................................................................................................16 5.3 Production Tracking ...................................................................................................................16 5.4 3rd Party Procurement .................................................................................................................17 5.5 B2B Product Catalog ..................................................................................................................17

6 Bibliography ........................................................................................................................................18

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1 Introduction Conclusion

The main conclusion of this paper is that In-ternet based applications can have very attrac-tive financial returns, even when the term e-Business has lost a lot of its attractiveness after the Dot.Com crash. I have found the Project Priorization Matrix to be a suitable tool to provide a unified view to both Internet and non-Internet related projects. Tools and Methodologies

A number of tools and methodologies have been used explicitly and implicitly during the elaboration of this report. These tools include: Porter 5 forces analysis, Supply Chain Man-agement, B2B Marketplaces, Communication Map, Project Priorization Matrix, the Extended Company, NPV and ROI calculation amongst others.

A communication map for a typical textile company, showing time and cost inefficiencies in the communi-cation processes with its business partners

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2 The Confection Industry 2.1 Overview The confection is currently the world's largest industry. Its development during the last century was the driver of the industrialization of Europe.

2.2 Market Segmentation and Purchase Criteria The apparel market decomposes in an innumerable set of segments that can be classified according to the following broad categories (based on [4]). The distinction between fashion and non-fashion segments is probably the most important factor. Fashion apparel is not an article of primary necessity and thus depends strongly on the available free income. In this segment, quality is the most important purchase criterion for the majority of female buyers (60%), while only 10% of the buyers say that price is most important [2]. Another 30% feel that design is most im-portant. On the other hand, non-fashion appar-el is more price-sensitive.

2.3 End-User Analysis Fashion Apparel

Women and label-conscious urban young peo-ple tend to be the prominent end-users in the Spanish apparel fashion market. They assign a great deal of importance to brand names and prefer natural materials, dark colors, comfort-able styles and classic designs. Women tend to prefer known brand names such as Xxx, Yyyy and Zzzz. However, these brands only reach those consumers with high purchasing power because of their high prices. Women's spring and summer fashions tend to be similar to the casual style of the Gap and Banana Re-public and can be seen in Zzzz. Linen, cotton, wool and synthetic fibers are the main materi-als used in this genre of apparel.

2.4 The Industry Value Chain

@Todo: Translate the diagram into English

Market Segmentation Criteria Fashion and non-Fashion

o Fashion Apparel with low price sensitivity o Non-Fashion Apparel with price sensitivity

Age group (infants, children, teenagers, adult, ) Product Type:

o Female suit, coat, tailored jacket and skirt o Female lingerie, loungewear and nightwear o Female blouse and Shirt o Female dress o Male Suit, Coat and Overcoat o Male Shirt o Male underwear and nightwear o Socks and hosiery o Trouser, Slack and Jean o Accessories

Occasion and Formality o Sports outfit o Casual wear o Business clothing o Formal clothing

Material (wool, cotton, linen, synthetic fiber, leather, ) Production Type (Cut and Sew, Knitting, )

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2.4.1 Fibers

Fibers are the main component of textile products in general. Fibers are spun into yarn, which in turn is converted into fabric. The standard fabric used in cut and sew apparel typically can be classified into three different types:

Natural fibers like cotton, wool or linen Artificial fibers like viscose, that have a natural origin but which go trough a transformation process and Synthetic fibers like nylon or polyester, which are produced by petrochemical processes.

2.4.2 Yarn Makers

The yarn making activities in Europe have declined notably since the 70. Most production has moved to 3rd world countries today. Only specialized yarn makers can be found in Europe and the United States.

2.4.3 Fabric Making Fabric making has developed in a similar way to yarn making with shift of production towards 3rd world countries such as Pakistan and India, particularly in the area of standardized, uncolored, untreated fabrics. The remaining industry in Europe is focuses on niche markets determined by flexibility, speed or custom production, using mainly Jacquard machines.

2.4.4 Finish

The finishing process uses a variety of production pro-cesses to adapt the characteristics of the fabric to the needs of the end users, in particular to fashion trends. These processes include:

Coloring Pattern Printing Frosting 5,08

11,02

8,02

8,00

-1,90

-5

0,04

-5 5 10

UE-15

Espaa

Francia

Italia

PortugalAlemania

Reino Unido

0

Finish Demand Evolution (1998-1999), Source: OETH

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2.4.5 Manufacturers

The manufacturers in the confection industry differ in the number of integrated production steps (production depth).

In general, all manufacturer exercise a tight control on design, product development, quality control and delivery (storage, picking, packaging and transport). Many manufacturers also include part or all of the dis-tribution chain.

The integration of production phases such as cutting, confection and ironing depends on the particular company and product.

Design and Prototyping: The first step towards a product is the design phase. Here the company has to define: The materials to use, color, color patterns, textures, finish, fit and form. Usually a software program allows deriving the cutting plans and the BOM (Bill of Material).

Cutting: Once the cutting plan has been derived from the design phase, the colored and finished fabric is cut using auto-mated cutters or manual cutting forms.

Sewing: The cut pieces are sewed together using an important amount of manual work. All attempts to automate this pro-cessing step have failed until now.

Finish: Buttons, ornaments and zippers are added to the product. The result is ironed to give it the final form.

The figure below summarizes the industry environment for the manufacturers according to Michael Porters 5 forces framework.

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2.5 Distribution For the most part, European consumers acquire their fashion goods in specialty stores, boutiques and large department stores. The large supermarket chains attract fewer buyers of apparel products. In Europe, 60 percent of the space in shopping centers is occupied by apparel and fashion accessories boutiques. Variety and quality are the characteristics that the buyers seek in the boutiques located in the shopping centers, while higher prices are the main drawback. [3]

2.5.1 Tendencies in Distribution

There is a growing trend among manufac-turers to create their own chains of distri-bution. Franchise has become a very common system for brand names distribu-tion of fashion products and wearing ap-parel The Spanish Franchise Association states that there are over 78 Spanish brand name franchises in the fashion sector with almost 3,000 boutiques.

The independent outlets are still (1992) the primary distribution channels in Spain, but they are loosing terrain mainly due to two reasons:

Disappearing: The consumers are in-creasingly demanding with respect to product quality presentation at the point of sales (POS). The new chains meet these demands while independent

12%

5%

10%

16%

57%

Altres Granssuperfcies

Cadenes ifranqucies

Gransmagatzems

Detallistesindependents

Quotes de mercat actuals, 1992

Evolution of the distribution channels in Spain (1985 1992), Source: Centro de Informacin Textil y de la

confeccin (CITYC)

Canvis en la penetraci sobre vendes

-14%

-15%

+7%

+150%

Detallistes independents

Grans magatzems

Cadenes i franqucies

Grans superfcies

Altres

0 5 10 15 20 25 30 35-5-10-15

+233%

Evolution of the distribution channels in Spain (1985 1992), Source: Centro de Informacin Textil y de la

confeccin (CITYC)

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outlets seem to be slower to adapt. Transforming: Other independent outlets adapt the franchising model or become associated to a specific brand.

The hypermarket format has experienced an important growth due to its low cost offerings achieved by means of their strong negotiation power. Typical products include:

Standard (commodity) products in the low price segments and Products with a strong brand image.

2.5.2 Product Brands against Distribution Brands However, the most important change has occurred with associated boutiques, franchising and multi-franchising outlets. This type of outlets allows for a higher profitability due to standardization and econo-mies of change.

Traditional independent sales outlets buy their products from a number of brand-owning providers. The outlet owners decide for the product mix, the shop location and its design.

In contrast, franchised outlets give up the design and product mix responsibilities to the chain, where more sophisticated personnel can leverage the distribution brand and deal with these marketing and product mix issues more efficiently.

ESQUEMA TRADICIONAL MARCA DE CAN AL

FABRICAN TE DETALLISTA

Diseo Fabricacin Distribucin Publicidad Comerciali - zacin

Diseo tienda Seleccin gama Gestin inmobil . Venta al cliente

Fabricante Marca canal

Fabricacin Distribucin

Gestin informacin Diseo

Publicidad Diseo tienda Seleccin de gama

Definicin polticas

Puntos deventa

Gestin inmobiliaria Venta al cliente

Puesta en prctica polticas

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3 Company Description Xxxxx is a medium size textile company (brick and mortar) with about 50M revenues/year, managing a total of 4 brands. The company size and the pleasant gross margin of X% are due to the strong brand positions and due to a general growth of the market dur-ing the last 10 years.

However, new entrants have ap-peared since 1999, attacking par-ticularly the low cost and fashion oriented segments of the market.

These entrants have been possible by using the vertical distribution format, consisting of tightly con-trolled franchising outlets as com-pared to the companys traditional customer base of independent sales outlets. These new players have entered from neighbor markets, lever-aging their already existing distribution brands. This situation, together with the general economic down-turn since 2000 has lead to decrease in sales, pressure on the gross margins and a financial situation that requires active measures.

Company Short Facts Worldwide sales with focus on Europe. Brand portfolio covering all major segments in its market, both fashion and non-fashion. Ca. 500 employees worldwide Produces about x million textile items per year Serving more then x customers in Europe and the rest of the world.

3.1 Corporate Configuration The value chain configuration of Xxxx follows in general the typical industry scheme as presented in chap-ter 3.4.5:

3.1.1 Design and Prototyping

Product development is lo-cated at the company head-quarters with input from the local sales & distribution offices. New collections are developed twice a year.

3.1.2 Production

All raw material is bought centralized at the headquar-ters and distributed to the

Distribution of the company departments by country @ToDo: change the slide

Production configuration ToDo: Change the slide

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local production plants and to contract manufacturers. The finished goods are collected in a centralized warehouse close to the headquarters where they are labeled and packaged for transport.

3.1.3 Distribution

Distribution is organized according to the type of clients as described chapter 3.5. There are three main out-let formats:

Hypermarkets Department Store Individual outlets: Traditional shops, typically located within residential neighborhoods or within city shopping

areas. This channel is differentiated in computer-savvy outlets and outlets that are not able nor willing to use the Internet for order management.

Franchised outlets: Same structure as the individual outlets, but limited to the company brands and owned by company.

Other: This includes channels for scrap, returned or outfashioned products.

3.1.4 IT-Infrastructure

The information systems at Xxxx are orga-nized around the idea that ERP systems are too brittle to adapt to the specific and fast changing needs of the textile sector. Exam-ples of such needs are:

The color-size matrix structure that is used for all ordering and production processes in the textile industry.

The outsourced production structure without a typical production floor but with the necessity of production tracking across organizational, country and time zone boundaries.

The frequently changing organizational structure due to market changes

The relatively low technical sophistication of the information system users.

In addition, there are negative reports about ERP installations at several other textile companies, talking about huge cost overruns and little productivity gains. These reports are difficult to verify, so that there is a lively discussion about the pros and cons of an ERP introduction.

Instead of an ERP, COMPANY has devel-oped an IT-Infrastructure based on several AS400-based applications with convenience applications being written in Visual Basic:

The operational processes are supported by AS/400 finance, order management and warehouse control applications

Product data are processed using a pro-duction management system in Clipper technology

Other requirements such as reporting, planning, system integration etc. are covered by proprietary applications writ-ten using Visual Basic + Microsoft SQL Server

This infrastructure has been working more or less satisfactory during several years.

Company configuration to be covered by IT systems ToDo: Change the slides

Current IT coverage of functional areas

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However, it is plagued by a set of problems typical to in-house developments: Disparate data: Data are held by several isolated systems, making it difficult to integrate processes and to generate

company-wide reports A high number of in-house employees is necessary to maintain the infrastructure. The usual difficulties with the in-house development such as cost overruns and unreliable timing.

3.1.5 Corporate Pressing Issues COMPANY enjoys relatively high margins of X% on average on its products. However, sales is currently declining due to a series of strategic and operational efficiency issues.

Strategic Issues: New Entrants: Several distribution chains have entered the market segments of low-cost and fashion oriented

products, coming from neighbor markets. The new entrants have been possible because of a vertical distribution structure explained in chapter 3.5.2.

Service Level: The service level of COMPANY has fallen back to industry average, while its superior service used to be a main factor for growth in the past.

Operational Efficiency Issues Lack of efficiency monitoring: Key indicators (Balanced Scorecard) are difficult to evaluate (due to disperse IT

systems), resulting in unmonitored performance of key processes. Independent Outlets: The distribution of the independent sales outlets is plagued by several inefficiencies, includ-

ing low inventory turnaround (0.5 3 turnarounds/year), low service level of X% and credit defaults. Also, shop owners are typically not very computer-savvy, effectively rendering useless Internet order entry and tracking ap-plications.

Service Level: The service level used to be one of the major growth factors and differentiator towards the competi-tion (according to word-of-mouth). However, the service level today is within the industry average of X%, across all distribution channels.

3.2 Competitive Environment Confidential

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4 E-Business Strategy In this section I will take the inputs from general business strategy, operational efficiency analysis and IT infrastructure to develop a roadmap of projects and applications for COMPANY. These projects include both classical IT projects and Internet applications without distinction because of the strong interrelation-ship amongst them.

Business priorities set by the general management have directed the e-Business strategy towards two press-ing issues (explained in chapter 3.1.5):

Verticalization: The creation of a vertical distribution channel that can compete in terms of operational efficien-cies with the new competitors and

Service: Improvement of the service towards the traditional sales outlet to gain market share.

The necessary change processes to achieve the strategic reorientation are also initiated and executed by the general management. This includes in particular the conversion of traditional outlet stores to franchised outlets as member of the newly founded X chain as well as the policy changes in sales, product delivery and replenishment.

4.1 Verticalization of Multi-Brand Sales Outlets Verticalization refers to the conversion of independent multi-brand sales outlets to franchised vertical shops with a single distribution brand (chapter 3.5.3). Important changes include:

Change in outlet ownership Central management of chain image and marketing Tight control of inventories within the shops: The currently low inventory turnover is in part due to the current

push sales strategy, trying to sell a maximum of products to the client, without taking into account the prefer-ences and needs of the final clients.

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This change affects the majority of business processes related to the operation of multi-brand outlets, in-cluding the role of the sales representatives, order processing, credit risk management, stock replenishment up to the product mix and the shop ownership.

Most of these processes are out of the scope of this document. However, some of the new processes need to be supported by new IT applications, which in turn need to access corporate data in a new way.

The following table summarizes the current and the future situation for each domain:

Area Current Situation Future Situation

Stra

tegy

Selling (pushing) a maximum of goods to the existing customer base

Controlling the distribution chain to optimize the value for the final clients and to minimize inefficiencies such stocks and obsolete material

Proce

sses

Sales Push a maximum of sales to sales outlets (the clients)

Help (consulting) the outlets to improve the attractive-ness of their shops

Orders Telephone order entry and tracking with lan-guage specific call centers Internet based order entry and tracking worldwide

Market Country specific offerings Global offering

A

pplic

atio

ns

Order Man.

Control client credit risk Call-center based order entry process Control the sales Sales force

Provide the products that the outlets need Internet based online catalog and order tracking Provide reporting functionality for the call-center to im-

prove incident resolution Provide business intelligence to the sales consultants.

In

frast

ruct

ure

Hard- ware

IBM AS400 mainframe Internal network with no access from outside

the company

Sun Solaris Internet servers Intranet infrastructure with managed access from out-

side the company Develop. RPG based software development TCL based software development

Hosting System administration and software develop-

ment handled mostly by an internal team Administration and development handled by an external

company with a fallback option to internal handling

4.1.1 Order Entry and Tracking The need for new applications is driven mainly from the new ordering and replenishment processes. In the past, order entry operation has been performed by a call center. Now order entry is done using an Internet application that also provides the updated product catalog, order tracking and delivery tracking. Please see chapter 5.3.8 for the details on this application.

A positive side effect on the service level can be achieved by the order tracking part of the application, as all information on the delivery status can be made available online. This allows the client to better estimate arrival time of items and allows for the cancellation of goods that would be delivered too late.

A second positive side effect is the global availability of the order management application and the possible regional extension of the markets.

4.1.2 3rd Party Sourcing Application The necessity to deliver a complete product mix to the sales outlet requires the management of a number or new 3rd party supliers. This is the domain of a buyer-side marketplace that COMPANY may feasibly oper-ate due to the volume of goods to be bought.

Alternatively, the supply module of a standard ERP system may cover this functionality.

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4.1.3 Infrastructure

A standard Internet infrastructure is required for the operation of the order management and 3rd party sourc-ing applications, because both applications have to be globally available over the Internet (chapter 5.3.9). This in turn requires the setup of an Internet maintenance and development team, either composed of inter-nal employees or by means of outsourcing.

4.2 Service Improvement The improvement of service towards all distribution channels is a very complex operational issue. Detailed analysis (not covered by this report) has shown that the service level is affected by a complex system of procedures and policies that are in place since several years. Improving the service is an ongoing issue since several years and is not likely to be resolved by developing a single project. However, two main areas of action have been identified as first steps as detailed in the following sections.

4.2.1 Production Tracking Until today, the process of tracking of the production in the outsourced sewing plants has been performed manually by sending back and forth faxes. The lack of digitalization of this process leads to deviations in the production and thus to delivery delays in the outlet stores.

A production tracking application improves this process substantially, allowing the remote sewing plants to maintain the status of all production orders over the Internet. The application works on the base of the product kit barcodes that are scanned in and sent to the central production control application over the Internet. The simple and robust Internet infrastructure is of primordial to this application because the ma-jority of the production plants of COMPANY are located in 3rd world countries. Please see the Production Tracking project in chapter 5.3 for details.

4.2.2 Business Intelligence A second factor that contributes to the poor service level is the lack of information about the process. This situation is caused by the existence of several disperse systems with non-integrated data. As a solution we suggest to integrate all data into a single Data Warehouse (chapter 5.2). We expect that the availability of more precise business information will help to identify of the causes of poor service and to take the appro-priate action.

4.3 Difficulties with Internet Projects The rest of this report assumes that Internet projects are to be handled just as ordinary IT projects. Howev-er, some differences remain according to my experience:

Team Skills: Internet applications are based on a system architecture (operating systems, programming language, development methodology, ) that is different from the usual corporate architectures. The additional knowledge and skills have to be covered either internally (training, hiring of new resources) or by external resources.

External Collaboration: Many e-Business projects are dealing with communication processes between a company and its business part-ners. Thus Internet projects tend to be more political then classical projects.

Internet Infrastructure: A suitable infrastructure has to be available to allow for a high availability of the Internet application during busi-ness hours. Such infrastructure includes hosting facilities, networking and security infrastructure such as firewalls and routers.

In the case of COMPANY, all three issues have been resolved by subcontracting an external consulting company.

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5 Project Proposals This chapter describes and analyzes a series of projects that are derived from the e-Business strategy of COMPANY plus some operational efficiency issues.

All projects are classified with a cost estimate, return of investment (ROI) and their net pre-sent value (NPV). Project cost estimates are taken from project proposals made by the consulting company YYY. ROI and NPV figures are based on my personal estimates, taking into account only measurable indicators. Non-measurable indica-tors are specified separately, not influencing the ROI/Cost classification. Please see Appendix 1 for a detailed calculation of the Cost and ROI figures.

The figure on the right shows the Cost/ROI classification of all following projects. Arrows indicate project dependencies.

Typically, one should start with the projects in the lower left quadrant, because these projects allow for high ROIs while consuming the least resources, effectively representing the low hanging fruits. Starting with these projects will allow for trust building and to accommodate all members of the team to the new processes.

5.1 Intranet & Knowledge Management Mini-Project Project Objectives

Provide convenient access and centralized storage for corporate documents that are currently distributed over a number of locations.

Document management in the IT department is currently deficient, with documents distributed over a series of systems and locations. As a result, knowledge about systems, procedures and data is based on individual persons and transmitted mouth-to-mouth. This situation leads to inefficiencies during the integration of new team members and to extended project devel-opment times. A second phase of the KM project could involve other departments, once the KM structure is working for the IT depart-ment.

Implementation Setup an Intranet server and define how different departments can publish data Train the users in creating contents for the Intranet Start the first phase with the IT-Department, involving about 3 editors (=content providers) and 15 active users Start a company-wide rollout, possibly starting with the HR department to gain acceptance with the employees. A

final stage (IT, HR, Production, Sales) could involve about 20 editors and 150 active users. Risks

Low involvement from department members, no involvement from senior management, generally low readiness for change.

The corporate culture is very informal, knowledge is frequently held informally The corporate employees are relatively unsophisticated in terms of IT usage.

Costs & ROI Costs of the first phase are composed of the Infrastructure setup, training of the content editors, some initial con-

tent editing, the training of 15 users and the initial setup. Software and licenses are free because the software al-ready exists. The benefit of the first phase is based on the assumption that the document system is saving 2 hours per month for each of the 15 IT department users.

Project Prioritization Matrix

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The second phase is calculated accordingly with 20 editors, 150 users and 60min/month saved time per user.

Project Investment Benefit /month ROI Intranet & KM 23.025 3.400 6,8Phase 1: IT-Department (3 editors, 15 users) 3.775 650 5,8Phase 2: Company wide (5 editors, 100 users) 19.250 2.750 7,05.2 Data Warehouse Project Objectives (please see Appendix 1 for details)

Allow for convenient access to corporate data, allowing for improved analysis of key performance indicators such as market share and service level

The project is a standard Data Warehouse, integrating data from different operational systems into a single database to make the task of writing reports easier.

Implementation Phase 1 consists of a Data Mart for sales, consolidating data existing systems into a single database. Also, external

data sources have to be integrated such as demographics and competitor information. Further phases include the setup of specific Data Marts for each department, customized to the specific department

needs. Reports are extracted from the Data Warehouse in the first phases using Crystal Reports. More advance (and ex-

pensive) reporting tools may be introduced later if there is a business case or a business need for it. Please refer to Appendix 2 for a preliminary implementation plan.

Costs and ROI Costs are based on a particular project proposal, calculating with 60 consulting days, 50% dedication of an in-

house employee and free software and licenses (already in place). Benefits are based on 50% time saving to two employees who are normally plus a fixed amount of 10.000 per month in improved sales due to better market in-telligence. Phase 2 and 3 are calculated accordingly, calculated with the same amount of savings. However, we expect the savings to be much higher in reality.

Project Investment Benefit /month NPV Data Warehouse 1 75.300 1.288.795 Phase 1: Sales Data Mart 39.300 13.100 442.361 Phase 2: Financial Data Integration 18.000 10.000 349.681 Phase 3: Production Integration 18.000 14.000 496.753

5.3 Production Tracking Project Objectives (please see Appendix 3 for details)

Improve the processes to track the production in the sewing plants in Africa and Asia by replacing fax/telephone workflows with Internet technology.

Improve the precision of the production schedule Improve the resolution of production incidents such as lost or hidden goods

As explained in chapter 3.1.2, COMPANY is contracting several sewing plants in Africa and Asia for the work intensive processes of the production chain. The tracking of this production process and the resolution of production issues are currently done manually by fax or telephone. This sit-uation leads to several inefficiencies such as:

The time required for the tracking process Frequent production delays due to the late detection of incidents Lacking information towards the clients about the status of an order

Implementation

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Implement a production tracking application to track the barcodes of the production units and Integrate the application with the existing IT systems

Costs and ROI Costs are based on a particular project proposal, assuming that the Internet infrastructure is already in place. Bene-

fits are based on saving 1-4 persons in the production-tracking department, which currently consists of 12 persons. Benefits from improved service and saved priority transport service are not included in the calculation.

Project Investment Benefit /month NPV Production Tracking 91.300 54.300 1.258.386 Phase 1: Pilot 64.000 -900 -84.814 Phase 2: Final Version 27.300 55.200 1.343.200

5.4 3rd Party Procurement Objectives (please see Appendix 4 for details)

Efficiently manage a number of providers worldwide using a purchasing marketplace.

This module is thought to extend an ERP negotiation module by negotiation capabilities over the Internet (request for quotation, request for proposal and reverse auction). Costs and ROI

No formal calculation has been made yet, because it is not clear yet whether such a module would be preferable to a classical ERP solution.

5.5 B2B Product Catalog Objectives (please see Appendix 5 for details)

Save headcount in the order processing department Extend the sales outlet base by lowering the barriers to become a customer Improve the service to existing customers by proving more information about the delivery of goods

Dependencies Requires a working Data Warehouse database

Description

The B2B Product Catalog consists of a classical Internet-Shop application plus custom functionality to allow for the tracking of orders and deliveries.

Cost and ROI The costs are based on a particular project proposal. The benefits are calculated based on the savings in the call

center as a function of the number of connected sales outlet. Benefits from market growth and service improve-ment are not includes.

Project Investment NPV B2B Catalog & Order Tracking 118.000 417.646 Phase 1: Pilot 78.000 -116.876 Phase 2: Final Version 40.000 534.522

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6 Bibliography [1] The Catalan industry: Textile and Confection. Generalitat de Catalunya [2] Spain Apparel Industry, U.S. & Foreign Commercial Service, http://www.tradeport.org/ts/countries/spain/isa/isar0012.html

[3] La confecci a Catalunya, Reforc Competitiu de les Manufactures de Disseny, Generalitat de Catalu-nya, Departamente dInsstria I Energia

[4] NAICS: North American Industry Classification System, http://www.census.gov/epcd/www/naics.html

[5] Impacto del Comercio Electrnico en el Sector Textil Espaol Fundacin Privada Cetemmsa, http://www.cetemmsa.es/

[6] Informe anual de lempresa catalana Generalitat de Catalunya, Departament dEconomia i Finances

[7] La ventaja competitiva del grupo Inditex-Zara, 1963-1999 Luis Alonso lvarez, Universidad de A Corua [8] The Hard Path To Competitiveness:The Organizational Fittedness of Spanish Textile Leaders Jordi Lpez Sintas [email protected], Ercilia Garca lvarez [email protected], Dept. Economia de l'Empresa, Universitat Autnoma de Barcelona

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